CFO “cheat sheet” – what are the 5 crucial financial focus areas?

Rowan De Klerk | CEO | The CFO Centre | mail me |

Is there a “cheat sheet” for when your executive committee (Exco) sits down with the Chief Financial Officer (CFO) to assess progress against strategic goals?

Many attribute the phrase “If you can’t measure it, you can’t manage it” to management expert Peter Drucker, though his actual perspective was more nuanced. Drucker emphasised the importance of tracking results and performance as essential elements for improving an organisation’s effectiveness. As a seasoned CFO and CEO, I fully agree with this sentiment – tracking results and performance is essential to building sustainable businesses.

Over the years, I’ve had the opportunity to sit at many Exco tables and if I were to create a “cheat sheet” based on companies that consistently excel and are set up to operate for generations to come, it would highlight five crucial financial focus areas.

Growth is there for survival

Growth may sound obvious, but it’s fundamental. If you aren’t growing in real terms, you’re effectively delivering a negative return on your capital.

In our strategy sessions, we talk about needing to achieve a minimum of 10% growth – but ideally, we aim for closer to twice the inflation rate. This isn’t just about targets; it’s about securing the future of your business. Without growth, you’re losing momentum.

For entrepreneurs and shareholders, growth goes hand-in-hand with building value in the business. Conducting an annual valuation can help you determine whether your strategy is truly translating into value, providing a reality check on your growth goals and showing if you’re still on track. Growth shouldn’t just be a line item on the agenda; it’s a key driver in building your business as a long-term asset.

What does the profit engine look like?

One of the most critical yet overlooked areas in many businesses is the “profit engine” – the underlying process that drives profitability. For too many leaders, profitability remains something abstract, leaving them without a clear sense of what powers it.

To simplify this, there are two key questions to consider:

• How complex is the profitability model in your business?
• Can you clearly demonstrate what drives it?

Today, we operate in a knowledge economy, with business models that can often be complex and, at times, opaque. Consider the rise of roles like “consultants,” “content creators,” and “influencers,” as well as ventures propped up by venture capital funding. It’s easy to get lost in these new paradigms, but the true test of any business is whether it can define its value proposition and prove how its efforts convert into revenue – and ultimately into sustainable profit.

In other words, if…